Page 12 - AfrOil Week 03 2020

AfrOil PROJECTS & COMPANIES AfrOil
Uganda still in talks with
Tullow, Total, CNOOC on Block 3A
No solution yet to tax disputes that derailed farm-in deal last year, Energy Ministry official says
UGANDA
Uganda is still in talks with foreign investors on the planned development of Block 3A, which includes the Kingfisher and Tilepa oilfields, but has not yet resolved the tax disputes that put the project on hold last year.
According to Robert Kasande, the perma- nent secretary of Uganda’s Energy Ministry, the parties are still in negotiations. He declined to reveal any details of the discussions during an interview with Bloomberg, saying that he had no update.
Kasande did say, though, that Kampala expected the cost of developing the two fields to reach $5bn or more. The investors will use this money “to drill over 500 wells” at Block 3A and to build infrastructure, including a water plant and two central processing facilities (CPFs), he added.
These funds will account for a significant portion of the $15-20bn worth of investment that will flow into the Ugandan oil sector over the next three to five years, he noted.
Some of the money will be used to cover the cost of building a new refinery and an export pipeline, he said.
In the meantime, Ugandan authorities are also planning to assign five other fields to out- side investors this year, Kasande said. Potential investors will have until March 31 to submit expressions of interest (EoIs), he stated.
Block 3A was originally assigned to the UK-Irish independent Tullow Oil. The com- pany has been pursuing a farm-in deal with France’s Total and China National Offshore Oil Corp. (CNOOC) for some time, but talks between the parties broke down last year amid disagreements over the amount of taxes due on the sale of part of Tullow’s stake.
As a result, the parties were not able to meet their deadline for making a final investment decision (FID) on the upstream project. In turn, Total suspended plans for the construction of a $3.5bn export pipeline that would pump
Ugandan oil to Tanzania’s coast.
These setbacks have caused financial prob-
lems for Uganda’s government. Kampala does not expect to collect enough revenue to cover the current fiscal year’s budget of UGX40.5tn ($11.013bn), so it has resorted to withdrawing around $121mn from its crude fund and will also take out a €600mn ($668mn) loan to fill the gaps. ™
Block 3A includes the Kingfisher and Tilepa fields (Image: Tullow Oil)
P12
w w w. N E W S B A S E . c o m Week 03 22•January•2020